Adobe Omniture VP Mellor Reviews Acquisition Of Data Platform Demdex

Today, Adobe announced that it has acquired data management solutions provider, Demdex. Financials were not disclosed. Read the release.

In a conversation with AdExchanger.com, Adobe Omniture’s vp of marketing, John Mellor, offered insights on the transaction and where Adobe’s Omniture unit plans to go with Demdex as it joins the Company’s Online Marketing Suite.

AdExchanger.com: For clarification, this is an acquisition by Adobe but it’s for the Omniture unit in particular, correct?

JM: That’s correct. Adobe is broken into business units and Omniture is one of those business units and largely in tact since we were acquired. Demdex will be [a part of Omnture] and Demdex CEO Randy Nicolau will report to Brad Rencher, GM of the Omniture business unit.

Do you plan on moving Demdex to California or keeping it in New York City?

Demdex has a great presence and team in New York City and we’re not interested in moving them. We’re interested in having a bigger presence in New York City in that it’s close to a lot of the agencies and publishers we work with.

What is the “target market” that Omniture will be focusing Demdex on?

The market that Demdex is currently focused on is exactly where we want them to stay. Regarding our customer base, over ½ of the volume of our transactions that we measure are from publishers – a rich customer set that includes 7 of the top 10 publishers who use the Adobe Online Marketing Suite. That will be a customer base that drives a lot of value out of the Demdex solution. When customers had been talking to Demdex, the customers and Demdex would have hurdles (tagging, creating a vendor relationship, etc.) that any small company experiences as a natural barrier to growth. Our relationships with publishers will accelerate Demdex business. Same on the advertisers side.

“Target market” also speaks to audiences inside these companies because the Online Marketing Suite grew up around the web analysts, now it has a strong footprint with the online/onsite marketers, who make the decisions about what offers to show once you’re on a site. In the last few years, we’ve also moved into the ad buyer market and today we manage over $1 billion in ad spend with our Search Center Plus product today. We’re already having discussions with a lot of the search marketers – this acquisition allows us to extend those discussions to display ad buyers and sellers.

Can you touch at a high level what the Adobe Online Marketing Suite includes – obviously Demdex now – but what else?

The Online Marketing Suite is how we put together all of the products that have either been organically built by Omniture or acquired. Today, there are 13 products. But, we think of them in 3 layers: platform, analytics and optimization.

The platform is the base layer that does all of the data collection, management and what measures our 5 trillion annual transactions per year.

The layer of analytics is about how do I look into the data and extract insight such as what parts of my site or content are performing better and why.

Finally, the optimization layer helps our customers take action on their data. For example, it’s one thing to understand that your shopping cart is broken and is showing a poor conversion rate, but the next step is now I need to test some alternatives and take some action on my site to give a better experience to the consumer.

And, Demdex fits in this optimization layer, correct?

Yes, Demdex is in the optimization layer around optimizing the ad buying and selling process. But, they also have some interesting tag management capabilities that will fit in the platform layer. In our data collection infrastructure, tag management is a real pain point for customers. Demdex has an elegant tag management infrastructure that allows a publisher to consolidate its tags into one tag.

What is the overall theme to this acquisition in Omniture’s estimation?

We have seen that the buying and selling of online ads has undergone dramatic changes in the past 18-24 months that put data at the center of buying and selling decisions. With real-time bidding exchanges and similar technologies, an advertiser can decide at the point of impression whether or not it’s valuable. Likewise, a publisher can make available information about that impression and help the advertiser make a decision.

In the macro sense, you have a $109 billion online ad market in which data is going to be the primary driver of efficiency. That’s where we see this fitting. We want to make our advertisers and publishers smarter. Demdex -and this is one of the exciting things about the company versus some of the other solutions out there - it doesn’t take a proprietary position on data, it does not have proprietary data, it’s not a data exchange. Demdex simply enables advertisers and publishers to augment their own data with third-party data and then we give them the tools to decide which third-party data is best.

So, we’re helping to enable and accelerate this market for third-party data providers. But, we’re making both advertisers and publishers very smart about what data is going to work – that fits into our philosophy. Demdex customers own their data, they’ll strike their own deals with third-party data providers. We just give them the infrastructure to manage it.

Do you see Demdex addressing the publisher’s need to sell guaranteed or so-called premium inventory? Or is this more about unlocking non-guaranteed inventory?

It’s about both. If you look at some of the RFP’s that we’ve seen from publishers where advertisers are saying to publishers, “I no longer want run-of-site or just the home page. I want males 18-24.” A publisher has to have the ability to deliver that type of audience and Demdex puts those tools in the hands of the publisher.

A year from now, what do you hope some of the outcomes of the acquisition today?

Our hope is that publishers feel more in control. I think publishers today feel short-changed with all of the technology development that has gone on on the buy-side. The publishers have been kind of left out. This acquisition brings power to the publishers by enabling them to monetize their audience, their data and take back some of the value they have been giving up to other people in this chain. I would love to see all of our big publishers adopting this solution to take control of their data.

How does Adobe Omniture bring all the Online Marketing Suite products together for clients? It seems that this is becoming an increasingly consultative and complex sale and that, in some ways, the service layer you might be building might resemble an agency. What do you think?

The need for services around these solutions are absolutely critical – especially in the early stages. We want to work with our big publishers and partners who will help us define how this will all come together. We have a rich ecosystem of agencies and partners that we work with – those agencies, we need to push them very hard to get them trained on this so they can leverage this technology with their customers directly. We are all about pushing best practices and playbooks to our agency partners so they can deliver the services. Agencies play a critical part in ad buying and selling and we have to empower them and help the customer get smarter. As the solution comes together more, then it becomes available to more people downstream. We saw this when we purchased Offermatica – people made similar claims that it’s hard, takes a lot of service. But that product has had a lot of development to make it simpler. Demdex will follow the same track.

Is Adobe/Omniture done acquiring? Would their be interest in future components such as a demand-side platform that helps publishers or advertisers buy?

We think the Online Marketing Suite is far from complete. The senior teams at Adobe and the Omniture business unit agree with that. We have a lot of work to do organically abut also “inorganically.” It’s very likely you’ll see future acquisitions from Adobe that helps us round out the suite. This market is growing quarter-to-quarter and always changing. Future acquisitions are absolutely possible but I don’t know which areas they’ll come in.

2 Comments

Congratulations to Randy and his team as well as the Demdex investors on a great outcome. Congratulations as well to Adobe on a very strategic transaction. LUMA Partners is proud to have represented Demdex.

Also, premium content providers need to start embracing the potential positive impact on campaign performance if they can take control of their 1st party data and learn to utilize 3rd party data. There's still too much fear that any audience targeting would take away from branding dollars in their own content environments. But I think if they simply made those content environments available as an alternative to blind oceans of inventory on the exchanges DSPs currently use, publishers can dip a toe in that pool and even make a significant splash into those budgets as well.

The battle shouldn’t be content vs. audience. It’s still a quality vs. blind environment discussion. Instead of selling impressions however, now we’re selling impressions and uniques.